Manchester Airport Grp Funding PLC Half-year Report (9757H)

TIDM38LZ

RNS Number : 9757H

Manchester Airport Grp Funding PLC

09 December 2020

Issuer: Manchester Airport Group Funding PLC

Date: 9 December 2020

Manchester Airport Group Funding PLC

Company No. 8826541

Interim Results

The Issuer's parent, Manchester Airport Group Investments Limited ("MAGIL"), today publishes its Interim Financial Report and consolidated financial statements for the half year ended 30 September 2020.

MAGIL's parent, Manchester Airports Holdings Limited ("MAHL"), today also publishes its Interim Financial Report and consolidated financial statements for the half year ended 30 September 2020.

The Interim Reports and consolidated financial statements for MAHL and MAGIL are available on MAHL's Investor Relations website at magairports.com/investor-relations.

Investor Presentation

A conference call to present the results to bondholders, bank lenders, rating agencies and credit analysts will be held on Wednesday 9 December 2020 at 10.00 am (UK time). The call will be hosted by Iain Ashworth, Corporate Finance Director, Jan Bramall, Chief Financial Officer, and Ken O'Toole, Chief Development Officer.

Dial-in details for the call are: UK local/standard international: [phone]. Confirmation code: 2920238.

The presentation can be viewed online during the event by using the link:

https://storm-virtual-uk.zoom.us/webinar/register/WN_PiphD4RpSX2m9IeRtAs_fA

MAGIL results for the 6 months ended 30 September 2020

MAGIL's performance for the 6 months to 30 September 2020 reflects the unprecedented period the aviation industry has faced this year following the impact of COVID-19.

Passenger numbers for the 6 month period fell to 4.2 million, a reduction of 88.5% compared to the 36.4 million passengers in the equivalent period of 2019. As a direct result MAGIL, in common with every other major aviation business made a significant loss during the period. Adjusted EBITDA* decreased from GBP268.1 million to GBP(87.5) million (GBP(355.6) million, (132.6)%).

Total Business

 
 Key Financials                6 months ended   6 months ended   Change (%) 
                                 30 September     30 September 
                                  2020 (GBPm)      2019 (GBPm) 
----------------------------  ---------------  ---------------  ----------- 
 Revenue                                102.4            540.6      (81.1)% 
 Adjusted EBITDA*                      (73.0)            281.8     (125.9)% 
 Adjusted EBITDA*(excluding 
  impact of IFRS 16)                   (87.5)            268.1     (132.6)% 
 Result from operations 
  (before significant 
  items)                              (163.8)            199.6     (182.1)% 
 Result from operations               (171.8)            185.7     (192.5)% 
 Result before taxation               (208.3)            186.7     (211.6)% 
----------------------------  ---------------  ---------------  ----------- 
 
 
 Passengers         6 months ended   6 months ended   Change (%) 
                      30 September     30 September 
                       2020 (GBPm)      2019 (GBPm) 
-----------------  ---------------  ---------------  ----------- 
 Manchester                    1.7             17.4      (90.2)% 
 London Stansted               2.2             15.9      (86.2)% 
 East Midlands                 0.3              3.1      (90.3)% 
-----------------  ---------------  ---------------  ----------- 
 Total                         4.2             36.4      (88.5%) 
-----------------  ---------------  ---------------  ----------- 
 

* Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, gains and losses on sales and valuation of investment properties, and significant items

MAGIL's response to the pandemic has been measured, strong and focussed on long-term recovery. All non-essential expenditure was frozen, all colleagues took a 10% pay cut from April 2020 and the size of its management team has been streamlined resulting in 25% fewer leaders and back office roles.

Shareholders have been supportive through this period providing GBP300m of new equity, which together with GBP340 million raised through the sale of MAGIL's non-core property portfolio contributed to a cash position of GBP624.6 million at 30 September 2020. In addition, banks and listed bondholders strongly endorsed MAGIL's financial and strategic response by agreeing to waive financial covenant tests at September 2020 and March 2021 and an amendment to September 2021.

MAGIL has led industry efforts to influence Government policy so that the aviation industry can fly more people in the short term and recover strongly in the medium-to-long term. It has helped the Government to introduce international travel corridors and then refine their application to consider islands separately from the mainland.

MAG has called consistently for a testing regime that would allow arrivals from higher risk destinations to quarantine for a shorter period of time. In late November, the Government confirmed that from 15 December it would introduce a 'Test to Release' system. The new system includes many of the features of a unified proposal to the Government that MAG brought the airport industry together behind earlier in the year. Importantly, the Government has also set out its ambition to keep refining the system and introducing faster and cheaper tests when it is safe to do so. MAG has launched testing centres at all of our airports to allow customers to book any tests that they need when arriving in the UK and for those looking to travel to other countries with pre-departure testing requirements.

Alongside our work to respond to the COVID-19 pandemic, MAGIL continues to focus on preparations for the end of the UK's transition period as we leave the European Union. We have put in place robust plans and arrangements to prepare the business for 1 January 2021, whatever the result of ongoing negotiations with Brussels. We have been trialling operational processes and ensuring they align with new post-Brexit rules and regulations - both in our terminals and around our cargo processing facilities. We are confident that operational disruption will be minimal.

Other headlines

-- Significant investment has been completed in the last three years and MAG's modern infrastructure will be an important component of a strong recovery. Following the outbreak of COVID-19, MAG has reduced and refocussed expenditure on its capital projects, given the reduction in passenger demand. The main phase of MAG's main capital project; MANTP, is near completion and will be completed in early 2021. Phase 3 will be revisited post recovery. Manchester Airport's modern facilities will continue to be the international gateway for the North, providing passenger and airline facilities for the future, and supporting commercial yields and operating efficiencies.

-- As at 30 September 2020, the Group's total listed bonds in issue was GBP1,460 million. Together with the GBP500 million revolving credit facility and a GBP90 million liquidity facility (both maturing June 2023), along with retained cash resources, these facilities provide the Group with a long-term stable funding platform.

-- Following the impact of COVID-19 and in accordance with the Amendment and Waiver Deed no dividends will be paid throughout the covenant waiver period. Dividends paid by MAHL are funded via Distributions from MAGIL.

-- MAG's financing strategy incorporates its strong investment grade ratings with Fitch and Moody's and a long-term financing structure to support growth. Maintaining this financial stability, even during the Group's recent transformation activities, places MAGIL in a strong position to maintain its operational capabilities and benefit from the upturn in demand levels when they arrive.

-- MAG has acted promptly and successfully implemented a strategic financing response. This includes significant cash mitigation measures across costs and capital expenditure; secured GBP300 million of additional funding from its shareholders; together with the GBP400 million realisation of MAG's non-core investment property. All of which, together with MAG's strong liquidity position at 30 September 2020, provides strong levels of funding beyond the next 12 months.

Note on MAGIL Results

A reconciliation between the financial results of MAGIL and MAHL is available in the appendix of the Investor Presentation, which is available on MAHL's Investor Relations website at magairports.com/investor-relations.

Enquiries:

   Investor Relations                                               [e-mail] 
   MAG Press Office                                                [e-mail] 

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December 09, 2020 02:00 ET (07:00 GMT)